Online fresh food delivery company Aussie Farmers Direct has gone into administration and will close immediately, saying it had been crushed by the competitive might of Coles and Woolworths.

The collapse leaves more than 100 franchisees and 260 employees out of work, and about 100,000 customers potentially with unfulfilled orders.

Aussie Farmers Direct was a trailblazer in grocery delivery when it started shipping fresh vegetables, meat, bread and dairy to customers’ doors in 2005.

But the decision to go head-to-head with Coles and Woolworths by expanding into a full grocery offering of predominantly Australian-made pantry items and household goods in 2016 is understood to have put unsustainable pressure on its finances.

The company appointed KordaMentha as administrator on Monday morning.

Aussie Farmers generally charges its customers for goods on purchase, so there is no expectation of a major refund process for the group's customers, according to sources.

KordaMentha administrator Craig Shepard said Aussie Farmers Direct had unsuccessfully tried to sell the business, and could not recapitalise it or find a partner to support its continued trading.

“Unfortunately, it is not possible to continue trading and the business will stop operating immediately,” Mr Shepard said.

A rescue plan for the group is looking unlikely as much of the company's debt is held by investors.

Launched amid a drought that was driving many farmers to the wall, Aussie Farmers Direct positioned itself as a champion of Australian agricultural producers which paid higher prices and developed direct relationships with suppliers.

The company was also outspoken on the dominance of Coles and Woolworths and the effect that $1 supermarket milk had on dairy farmers.

Mr Shepard said that Aussie Farmers Direct had struggled to compete with Coles and Woolworths, with directors saying it had been hampered by the major supermarkets' low-cost imported products.

Contracts with farmers are expected to be disclaimed and some farmers may become creditors of the company if they had forward supply contracts. Given this stock is perishable there is a chance the goods will be given to charity.

Administrators today will work through arrangements for customers and farmers.

Aussie Farmers Direct's more than 100 franchisees will cease trading on Monday after completing scheduled deliveries on Monday morning, it is understood.

A small number of franchisees may be offered work at Home Delivery Service, which is AFD's still-trading, last-mile logistics company that delivers for wine and food companies.

Aussie Farmers Direct is the trading name of Stay in Bed Milk & Bread Pty Ltd. That company lists its shareholder as Aussie Farmers Holding Company.

ASIC documents list chief executive Brendan Shaw and Australian private equity outfit Equity Partners as local investors. The group also has investors from Singapore and America.

Aussie Farmers Holding Company had $65 million in paid up capital ahead of its collapse.

A meeting of creditors will be called next week. KordaMentha will refund any customers left out of pocket.